Here are 6 political scenarios for South Africa – including a massive split in the ANC

South African president Cyril Ramaphosa will deliver his fourth state-of-the-nation address on Thursday (13 February), with both business and consumer confidence at rock bottom and ‘Ramaphoria’ almost a forgotten memory.

Ramaphosa’s efforts to ignite growth and undo almost a decade of ‘hollowing out’ of state institutions that happened under his predecessor Jacob Zuma are being hampered by internal battles in the ANC and powerful labour unions who are opposed to cuts in government spending and state jobs, Bloomberg reported in handing out a report card for the country’s president.

Jeff Schultz, senior economist at global bank BNP Paribas South Africa, says that he expects 2020 to be another gloomy year for South Africa’s economy.

Speaking at a BNP Paribas quarterly economic update event at Melrose Arch in Johannesburg on Monday (10 January), Schultz said that continued electricity outages are the main reason behind a 0.3pp cut to the group’s already sub-consensus 2020 GDP growth estimate (now 0.5%).

Schultz said that state-owned enterprises are likely to be high on this year’s agenda, especially the restructuring of Eskom.

He added that Moody’s is also likely to be an important factor. “In our view, the likely Moody’s downgrade of the sovereign rating in 2020 will be felt in economic confidence more than in local asset prices.”

The economist also ventured into plotting potential political scenarios that could determine the economic future of the country over the medium-term.

“Sentiment might improve on political developments that allow for institutional reforms, progress on public-sector wages and privatisations and corruption prosecutions. However, political noise is likely to get louder into mid-2020,” BNP Paribas said.

The group plotted six potential scenarios, with the most likely, BNP Paribas said, being the continuation of the status quo.

It said that it expects tensions in ANC and alliance partners (Congress of South African Trade Unions and South African Communist Party) over policy to persist, while policy-making continues in ‘muddling along’ mode.

This, it said, is unlikely to last beyond 2022 party conference, though.

Notably, among the six political futures, BNP Paribas sees a potentially massive split in the ANC in three of them: one where Ramaphosa comes out victorious, leaving opponents upset; one where Ramphosa fails, leaving his supporters upset; and one where no common ground can be found between the two factions, leading to a major split.

The three splitting scenarios all play about before the 2024 general elections.


Read: Economist makes bold prediction of where the rand could go in 2020

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Here are 6 political scenarios for South Africa – including a massive split in the ANC